PLNT Stock: Planet Fitness Inc Shares Tank on Secondary Offering

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Planet Fitness Inc (PLNT) is taking a horrendous beating Tuesday morning, shedding just over 8% of its value at one point on the announcement of a secondary public offering of 10 million shares from current shareholders. At 10 million, the offering is 27% of the shares outstanding for PLNT.

PLNT Stock: Planet Fitness Inc Shares Tank on Secondary OfferingTypically, a secondary offering is an attempt to raise money for a company to continue growing, or to refinance, but Planet Fitness will not be the recipient of the offering’s proceeds.

PLNT Stock’s Offering

Rather, the PLNT shares are being put up by selling shareholders of PLNT Class A shares. In other words, these shareholders are cashing in big-time on the 25% three-month run in PLNT prior to today’s selloff.

The proposed offering will be managed by JPMorgan Chase & Co (JPM), Jefferies Group LLC (JEF) and Guggenheim Securities, each of whom have the option to purchase an additional 1.5 million shares.

Even after the 8% drop, Planet Fitness is up around 12.5% since going public last August; and just yesterday, PLNT stock set a closing record price of $19.49.

For those still bullish on PLNT shares despite the massive selling of shares, today’s hammering could be a solid bargain. Analysts have set a 12-month target of $21 for Planet Fitness stock, which leaves about 17% upside, with 10 of the 11 analysts covering the stock recommending it as a buy.

And then, today’s downswing puts PLNT on the path toward support at its 50-day moving average, which should set up nicely for the bulls as the company nears its Aug. 9 earnings date.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/06/plnt-stock-planet-fitness-secondary-offering/.

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